Answer and Explanation:
The computation is shown below:
a. Marpor's value without leverage is
But before that first we have to calculate the required rate of return which is
The Required rate of return = Risk Free rate of return + Beta × market risk premium
= 5% + 1.1 × (15% - 5%)
= 16%
Now without leverage is
= Free cash flows generates ÷ required rate of return
= $16,000,000 ÷ 16%
= $100,000,000
b. And, with the new leverage is
= (Free cash flows with debt ÷ required rate of return) + (Tax rate × increase of debt)
= ($15,000,000 ÷ 0.16) + (0.35 × $40,000,000)
= $93,750,000 + $14,000,000
= $107,750,000
Answer:
business market
Explanation:
Based on the information provided within the question Cynthia's organization targets the business market. This is defined as the market in which a product/service is sold to another business/company/entity and they either use daily, resell or use for production. Which in this scenario Cynthia is an engineer installing electrical systems which her clients will use for daily usage.
I hope this answered your question. If you have any more questions feel free to ask away at Brainly.
Answer:
The cost of equity capital is 9.26%
Explanation:
Using the DCF approach we usually calculate the price of stock or fair value of stock at a certain period in time based on the dividends the company is expected to pay. If the price today is provided then we can calculate the missing figure if any when other variables are provided.
The formula for DCF with constant growth model is,
P0 = D0*(1+g) / r - g
Where r is the required rate of return.
26 = 0.8*(1+0.06) / r - 0.06
26 * (r-0.06) = 0.848
26r - 1.56 = 0.848
26r = 0.848 + 1.56
r = 2.408 / 26
r = 0.0926 or 9.26%
